{"id":1678,"date":"2023-03-01T10:00:39","date_gmt":"2023-03-01T10:00:39","guid":{"rendered":"https:\/\/tradersontrend.com\/?p=1678"},"modified":"2023-12-11T10:27:57","modified_gmt":"2023-12-11T10:27:57","slug":"treacherous-seas-ahead-for-cruise-line-stocks","status":"publish","type":"post","link":"https:\/\/wallstwarroom.com\/h\/offers\/treacherous-seas-ahead-for-cruise-line-stocks\/","title":{"rendered":"Treacherous Seas Ahead for Cruise Line Stocks?"},"content":{"rendered":"\t\t
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After the outbreak of the epidemic, cruise line stocks have skyrocketed.<\/p>

The stock of Royal Caribbean Group (NYSE: RCL<\/a>) has increased by 294%. Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH<\/a>) has increased 188% in value. Carnival Cruise Lines (NYSE: CCL<\/a>) has gained 124%.<\/p>

According to current expert analysis, these stocks may have further to run.<\/p>

Traders may find cruise line stocks appealing as a result.

Nonetheless, investors should proceed with caution at this time.<\/p>

Many headwinds must yet be removed before the cruise line business can sail smoothly.<\/p>

These impediments are debt, pricing power, and the country’s enduring recessionary threat.<\/p>

Cruising Remains Popular<\/span><\/strong><\/p>

Consider that. At the start of the <\/span>Covid-19 epidemic<\/a>, some analysts predicted that a global pandemic and the uncertainty caused by an airborne virus would dampen people’s desire to travel. <\/span><\/p>

That hasn’t happened.<\/p>

Cruise line bookings were good in 2022 and are expected to remain strong in 2023.<\/p>

Part of this was predictable. There is a devoted following of cruise aficionados who will always return to the sea.<\/p>

And the pandemic has caused all cruise companies to reconsider how they have previously done things in order to create a more frictionless environment in an environment where socializing is the name of the game.<\/p>

Some hesitant travelers have returned as a result of this.<\/p>

In addition, a Morning Consult survey of 2,200 Americans found that trust in cruise lines is increasing<\/a>.<\/p>

Substantial Discounts are Being Phased Out, but Will Demand Remain Strong?<\/strong><\/p>

Deep discounts were another reason that enticed travelers to return to cruises. <\/span><\/p>

Taking a cruise has long been regarded as a good investment when compared to other vacation options.<\/p>

This was especially true as cruise lines used incentives to entice returning consumers.<\/p>

It’s effective. But at what price?<\/p>

To survive the epidemic, every cruise line was compelled to incur enormous debt.<\/p>

Now that the ships are back at sea, the emphasis is shifting toward profitability.<\/p>

This is where things become murky.<\/p>

Some travelers discover that the cost of a flight to the port of departure exceeds the cost of the cruise<\/a> and airfare is not likely to fall any time soon. Yet, unlike airlines, it is unclear if cruise line stocks will be able to pass on expenses.<\/p>

Debt Continues to be a Significant Drain on Earnings<\/span><\/strong><\/p>

The good news is that several of the major cruise operators anticipate profit in 2023. <\/span><\/p>

The bad news is that it appears that most of that has already been factored in.<\/p>

Royal Caribbean, for example, anticipates positive earnings per share of $4.84 in 2023.<\/p>

After several years of losses, this is heartening.<\/p>

Nonetheless, that is almost similar to half of the company’s full-year EPS in 2019 ($9.54).<\/p>

That is the main problem. RCL stock was worth about $133 per share at the end of 2019.<\/p>

It is currently selling at roughly $70 per share as of this writing.<\/p>

You could argue that Royal Caribbean was trading at a discount to the S&P 500 at the time.<\/p>

Nonetheless, it is presently trading at a premium.<\/p>

Consider Carnival’s capital structure currently vs at the end of 2019.<\/p>

As of February 27, 2023, the number of outstanding shares has increased from 684 million to about 1.1 billion.<\/p>

That’s a lot of dilution to take in for investors<\/a>. And the company’s overall net debt has nearly tripled to $31.7 billion.<\/p>

Fears of a Recession<\/span><\/strong><\/p>

Revenge travel is still going strong. While the fact that customers were transitioning from buying things to buying experiences makes sense, it doesn’t explain the elasticity of this desire. <\/span><\/p>

Consumers have used their credit cards, and savings rates are beginning to rise, according to economic data.<\/p>

None of this shows a desire to travel.<\/p>

One popular notion is that many recently laid-off tech workers take time off before commencing their next job.<\/p>

If this is the case, demand for travel is likely to weaken<\/a> as the year progresses.<\/p>

Don’t Get Caught in a Value Trap<\/span><\/strong><\/p>

It can be tempting to look at cruise line stocks with starry eyes at a time when value is hard to come by. <\/span><\/p>

Notwithstanding their advances since the epidemic, these firms are not in the same financial situation as they were in 2019.<\/p>

That is not the companies’ fault. It doesn’t mean they’re as gorgeous as they appear.<\/p>

While cruise line stocks are not as speculative as the meme stocks of 2021, they nevertheless belong only in the risk-on portion of a portfolio and it should only account for 5% to 10% of your whole portfolio.<\/p>

Royal Caribbean appears to be the finest of the lot, but that’s a shaky endorsement.<\/p>

For More Stocks And Investment Related News, Click\u00a0Here<\/a>.<\/em><\/p>

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After the outbreak of the epidemic, cruise line stocks have skyrocketed. The stock of Royal Caribbean Group (NYSE: RCL) has increased by 294%. Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) has increased 188% in value. Carnival Cruise Lines (NYSE: CCL) has gained 124%. According to current expert analysis, these stocks may have further to run….<\/p>\n","protected":false},"author":2,"featured_media":4223,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"elementor_theme","format":"standard","meta":{"_eb_attr":"","footnotes":""},"categories":[6],"tags":[590,591,592,593],"class_list":["post-1678","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-offers","tag-ccl","tag-cruise-line-stocks","tag-nclh","tag-rcl"],"_links":{"self":[{"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/posts\/1678","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/comments?post=1678"}],"version-history":[{"count":1,"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/posts\/1678\/revisions"}],"predecessor-version":[{"id":4135,"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/posts\/1678\/revisions\/4135"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/media\/4223"}],"wp:attachment":[{"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/media?parent=1678"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/categories?post=1678"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/tags?post=1678"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}